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Tutorial Questions
Unit 2 Property Tax
Question 4
(a)
Explain the conditions under which a person is subject to Hong Kong Property Tax.
(b)
Miss Chan purchased a residential property in March 2008. It was let out on 1 June
2008 on the following terms:
1.
2.
3.
4.
5.
Miss Chan paid mortgage interest of $25,000 per month to the bank in respect of the
aforesaid property for a period of 10 years commencing from 1 March 2008.
Required:
Based on the information given above, compute Miss Chan's property tax liabilities for
the years of assessment 2007/08, 2008/09 and 2009/10. Ignore provisional tax in your
calculation.
TQ_U2_Property
Question 5
Mr. Mo bought a shop unit in Chaiwan on 1 August 2007. The shop unit was let to a retail
company on 1 September 2007 on the following terms:
1.
2.
3.
4.
5.
6.
Term of lease: 3 years from 1 September 2007 plus 2-year renewal option
Rent free period: 1 September 2007 to 31 October 2007.
Rental deposit: $112,000 payable on 1 September 2007. As per lease agreement, rental
deposit is used to compensate any loss of revenue when tenant is default in payment.
Rent: $56,000 per month payable in advance.
Rates: $8,100 per quarter, payable by landlord.
Management fee: $4,500 per month, payable by tenant directly to the management
company.
Starting from 1 February 2008, the tenant failed to pay rents to Mr. Mo. It also failed to pay
management fees to the management company. On 1 May 2008, the tenant moved out and
could not be contacted any more. Mr. Mo was required to pay the overdue management fee
of $13,500 to the management company in respect of the period from February to April; and
agreed to settle the management fee on time for the subsequent months until further notice.
On 1 July 2008, Mr. Mo let the shop again to Pizzas Ltd. on the following terms:
1.
2.
3.
4.
5.
6.
Required:
Based on the information given above, compute Mr. Mos property tax liabilities for the years
of assessment 2007/08 and 2008/09. Ignore provisional tax in your calculation.
TQ_U2_Property
Question 6
Mr. Newton is a Canadian citizen. In June 2008, he came to Hong Kong and purchased a
property in North Point for investment purposes. On 1 July 2008, Mr. Newton signed a 4-year
tenancy agreement with a Mr. Wong on the following terms:
1.
2.
3.
4.
5.
6.
7.
After signing the tenancy agreement, Mr. Newton returned to Canada. In October 2008, Mr.
Chau received a provisional property tax return for the year of assessment 2008/09. Mr.
Chau considered that Mr. Newton was not a chargeable person in Hong Kong as he was not a
Hong Kong resident. He therefore ignored the return and the subsequent reminder. In
December 2008, Mr. Chau received a notice of demand for payment of provisional property
tax for the year of assessment 2008/09, dated 10 December 2008. In the notice, the Assessor
estimated the net assessable value of the property as $280,000. Total property tax of $44,800
is payable on 28 January 2009. Mr. Chau was shocked and approached you as a tax
consultant for advice.
(Remark: assuming that it is now 20 December 2008 for the purpose of this question).
Required:
Advise Mr. Chau on Mr. Newtons property tax liability for the year of assessment 2008/09.
TQ_U2_Property